The multi-asset investment team remains constructive on cyclical assets, balancing optimism with caution regarding extended market valuations. While the firm warns that high leverage and heavy concentration in AI stocks present potential risks, it sees no immediate signs of a decline in growth dynamics that would necessitate a defensive pivot.
Schroders shifts to gold while maintaining equity appetite
Central bank buying has prompted Schroders to upgrade its outlook on gold, even as the investment house maintains a pro-cyclical stance. Despite concerns over market concentration in artificial intelligence, the firm continues to favor equities, citing resilient global growth and strong corporate earnings as the primary drivers of its strategy.
Schroders has bolstered its holdings in technology and expanded its exposure to German equities, specifically targeting the industrial and defense sectors. This strategy is complemented by continued investment in global mining and energy producers. Beyond equities, the firm finds value in fixed income, tactically favoring US Treasuries due to attractive inflation-adjusted yields. The firm identifies accelerating inflation and any significant erosion of investor confidence in AI as the primary threats to its current market positioning.
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